Decrease in real GDP is also smaller than the initial estimate
Canada’s gross domestic product shrank by 0.1% in July, according to recent data from Statistics Canada.
The figure is considerably better the initial estimate of a 0.4% decrease in GDP. StatCan said it expects the economy to rebound in August with a 0.7% increase in real GDP as public health restrictions ease across the country.
While summer weather and looser health restrictions drove growth in several sectors – including the accommodation and food services sector and the arts, entertainment, and recreation sector – the expansion was offset by declines in agriculture, utilities, manufacturing, and wholesale trade.
The construction sector, in particular, contracted by 0.9% in July, according to StatsCan. The decline was driven by lower residential building construction, which fell by 2.7% in July – a third straight monthly decline, after reaching a record high in April.
Despite this, Douglas Porter, chief economist of BMO, said that the figures provide a “a small tonic to the troubling results from a month ago.”
“The slightly smaller-than-expected setback in July and nice pop in August suggest that the economy managed to grind out some moderate growth in the summer quarter as a whole,” said Porter. “We continue to expect Q3 to print growth of around 3.5%.”
Royce Mendes, executive director, economics at CIBC, said that while the slowdown in the construction sector held back the economy in July, housing markets “appear to be perking up again, and these sectors could reaccelerate, particularly if consumers end up spending more time at home again this winter.”
